Accounting Policies of Greaves Cotton Ltd. Company

Mar 31, 2014

1.1 Basis of accounting and preparation of financial statements

The Company maintains its accounts on accrual basis following the
historical cost convention, in accordance with generally accepted
accounting principles [GAAP] except for the revaluation of certain fixed
assets, in compliance with the provisions of the Companies Act, 1956
including the Accounting Standards specified in the Companies
(Accounting Standards) Rules, 2006. However, certain escalation and
other claims, which are not ascertainable /acknowledged by customers,
are accounted on receipt basis.

The preparation of financial statements in conformity with GAAP requires
that the management of the Company make estimates and assumptions that
affect the reported amounts of income and expenses of the period, the
reported balances of assets and liabilities and the disclosures
relating to contingent liabilities as of the date of the financial
statements. Examples of such estimates include the useful lives of
tangible and intangible fixed assets, provision for doubtful debts /
advances, future obligations in respect of retirement Benefit plans,
provision for inventory obsolescence, impairment of investments, etc.
Difference, if any, between the actual results and estimates is
recognized in the period in which the results are known.

All assets and liabilities have been classified as current and
non-current as per normal operating cycle of the Company and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on nature of products / services, the Company has ascertained its
operating cycle as 12 months for the purpose of current and non-current
classification of assets and liabilities.

b) Work-in-progress at lower of weighted average cost including
conversion cost or net realisable value.

c) Finished goods at lower of weighted average cost including
conversion cost and excise duty paid / payable on such goods or net
realisable value.

1.3 Depreciation and Amortisation

a) Tangible assets:

i) Depreciation on revalued fixed assets is provided on the re-valued
amount derived based on valuation carried out by independent valuers.
The depreciation on re-valued portion of the fixed assets is transferred
from revaluation reserve to the statement of profit and loss.

ii) Depreciation on fixed assets is provided on straight line method at
the rates and in the manner prescribed under schedule XIV to the
Companies Act, 1956.

iii) In the case of fixed assets where the technological progress and
upgradation is faster, the Company has provided accelerated
depreciation at rates higher than the rates specified in schedule XIV to
the Companies Act, 1956. Accordingly, the useful life of such assets
has been recomputed and depreciation has been provided at the following
rates with effect from 1st July, 2003:

iv) Extra shift depreciation is provided on location basis.

v) Leasehold land is amortised over the primary period of the lease.

vi) Leasehold Building is depreciated at rates prescribed for buildings
under schedule XIV of the Companies Act, 1956 or rates derived based on
lease term for the leasehold building, whichever is higher. Leasehold
building improvements are written of over the period of lease or their
estimated useful life, whichever is earlier, on a straight line basis.

b) Intangible assets:

i) a) Technical know-how acquired prior to the year 2001 is amortised
as per the rates applicable to plant and equipment prescribed under
schedule XIV to the Companies Act, 1956.

b) Technical know-how acquired during and after the year 2001 is
amortised over a period of five years.

ii) Computer software is amortised over a period of four years.

1.4 Research and Development

Revenue expenditure on research and development is charged under
respective heads of expenditure in the statement of profit and loss.
Capital expenditure on research and development is included as part of
fixed assets and depreciated on the same basis as other fixed assets.

1.5 Revenue Recognition

a) i) Revenue from sale of products is recognised when all the
significant risks and rewards of ownership of the products are passed on
to the customers, which is generally on despatch of goods.

ii) Revenue in respect of services is recognised when services are
performed in accordance with the terms of contract with customers.

c) Revenue from royalty is accrued and recognised, when the specified
goods of the supplier are sold by the Company''s dealers in accordance
with the terms of agreement.

d) Export incentives are recognised when the right to receive the
Benefit is established.

1.6 Fixed assets (including capital work in progress)

a) Tangible assets:

Tangible fixed assets are stated at original cost net of Cenvat availed
less accumulated depreciation except in case of certain fireehold land
and buildings which are stated at re-valued amounts as at 31st May
1987, based on valuation carried out by independent valuers, less
accumulated depreciation. Own manufactured assets are capitalised at
factory cost. Cost includes inward firelight, taxes and expenses
incidental to acquisition and installation, up to the point the asset
is ready for its intended use. Certain project related direct expenses,
incurred at site for the period upto the date of commencement of
commercial production are capitalised. (Also refer to accounting policy
on borrowing costs infra).

b) Intangible assets:

Intangible assets are stated at cost of acquisition less amortisation.

c) Capital work in progress:

Capital work in progress includes cost of equipments and other expenses
incidental to its acquisition which are not yet ready for use.

1.7 Foreign currency transactions

a) The reporting currency of the Company is Indian Rupee.

b) Foreign currency transactions are recorded on initial recognition in
the reporting currency using the exchange rates prevailing at the date
of the transaction.

c) Monetary assets and Monetary liabilities denominated in foreign
currencies (other than those relating to foreign branch) are converted
at rate of exchange prevailing on the date of the balance sheet.

d) Exchange Differences on settlement/conversion are included in the
statement of profit and loss in the period in which they arise.

e) Foreign exchange Differences arising on marking forward contracts to
market rates are recognised in the statement of profit and loss in the
period in which they arise and the premium paid/received is accounted
as expense/income over the period of the contract.

f) Translations relating to foreign branch are recorded as under:

i) Monetary assets and Monetary liabilities are converted at period-end
rates as applicable.

ii) Revenue items are translated at the average rate for the period.

iii) All Differences arising on translation of foreign currency balances
are included in the statement of profit and loss.

1.8 Investments

Long term investments are carried at cost after providing for any
diminution in value, if such diminution is of a permanent nature.

Current Investments are carried at lower of cost or market value.

1.9 Employee Benefits

a) Short Term Employee Benefits:

All employee Benefits falling due wholly within twelve months of
rendering the service are classified as short term employee Benefits. The
Benefits like salaries, wages, short term compensated absences, expected
cost of bonus, ex- gratia etc. are recognised on undiscounted basis in
the period in which the employee renders the related service.

b) Post-employment Benefits:

i) Defined contribution plans: The Company''s contribution to the
state-administered provident fund and employees'' pension scheme and the
employees'' superannuation scheme are defined contribution plans. The
contribution paid/ payable under the schemes based on a fixed percentage
of the eligible employees'' salary is recognised during the period in
which the employee renders the related service. The Company has no
further obligation beyond these contributions.

ii) Defined Benefit plans: The employees'' gratuity fund schemes managed
by Trusts are the Company''s defined Benefit plans. The present value of
the obligation is determined based on actuarial valuation using the
projected unit credit method which recognises each period of service as
giving rise to additional unit of employee Benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gains and losses are recognised immediately in the statement
of profit and loss. In case of funded plans, the fair value of the plan
assets is reduced from the gross obligation, to recognise the
obligation on a net basis.

iii) Long-term employee Benefits: The obligation for long term
compensated absences is recognised in the same manner as in the case of
defined Benefit plans as mentioned in (b) (ii) above.

1.10 Borrowing costs

Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of such assets till such time the asset is ready for its intended use
or sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.

1.11 Segment accounting and reporting

a) Segment accounting and reporting which is done in accordance with
the accounting policies of the Company and the guidelines prescribed by
Accounting Standard 17, Segment Reporting, as specified in the Companies
(Accounting Standards) Rules, 2006 is as follows:

i) Segment revenue includes sales and other income directly Identifiiable
with/ allocable to the segment including inter-segment revenue.

ii) Expenses that are directly Identifiiable with/ allocable to segments
are considered for determining the segment result. The expenses, which
relate to the Company as a whole and not allocable to segments, are
included under "unallowable expenditure".

iii) Income which relates to the Company as a whole and not allocable
to segments is included in "unallowable income".

iv) Segment assets and liabilities include those directly Identifiiable
with respective segments. Unallowable assets and liabilities represent
the assets and liabilities that relate to the Company as a whole and
not allocable to any segment.

b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business
segments is accounted on the basis of transfer price agreed between the
segments.

1.12 Leases

Assets acquired on lease where a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the statement of profit
and loss on a straight line basis.

1.13 Taxes on income

Tax on income for the current period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessments / appeals. The provision for tax is adjusted for
Minimum Alternate Tax (MAT) paid in earlier years.

Deferred tax is recognised on timing Differences between the accounting
income and the taxable income for the period and quantified using the
tax rates and laws enacted or substantively enacted on the balance
sheet date. Where there are unabsorbed business losses and/or
unabsorbed depreciation, deferred tax assets are recognised and carried
forward only to the extent that management is virtually certain that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. Deferred tax assets are recognised
only to the extent there is a reasonable certainty of realisation in
future. Such assets are reviewed at each balance sheet date to reassess
realisation.

1.14 Impairment of assets

The carrying amount of assets, other than inventories is reviewed at
each balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount of
the assets is estimated.

An impairment loss is recognised whenever the carrying amount of an
asset or a cash generating unit exceeds its recoverable amount. The
recoverable amount is the higher of the asset''s net selling price and
value in use determined based on the present value of estimated future
cash flows. All impairment losses are recognised in the statement of
profit and loss.

After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.

1.15 Provisions, contingent liabilities and contingent assets

a) Provisions are recognised for liabilities that can be measured only
by using a substantial degree of estimation, if

i) the Company has a present obligation as a result of a past event,

ii) a probable outflow of resources is expected to settle the obligation
and

iii) the amount of the obligation can be reliably estimated.

b) Reimbursement expected in respect of expenditure required to settle
a liability is recognised only when it is virtually certain that the
reimbursement will be received.

c) Contingent liability is disclosed in the case of

i) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
obligation

ii) a present obligation when no reliable estimate is possible, and

iii) a possible obligation, arising from past events where the
probability of outflow of resources is remote.

d) Contingent assets are neither recognised nor disclosed.

e) Provisions, contingent liabilities and contingent assets are
reviewed at each balance sheet date and updated / recognised as
appropriate.

Mar 31, 2013

1.1 Basis of accounting and preparation of financial statements

The Company maintains its accounts on accrual basis following the
historical cost convention, in accordance with generally accepted
accounting principles [GAAP] except for the revaluation of certain
fixed assets, in compliance with the provisions of the Companies Act,
1956 including the Accounting Standards specified in the Companies
(Accounting Standards) Rules, 2006. However, certain escalation and
other claims, which are not ascertainable /acknowledged by customers,
are accounted on receipt basis.

The preparation of financial statements in conformity with GAAP
requires that the management of the Company make estimates and
assumptions that affect the reported amounts of income and expenses of
the period, the reported balances of assets and liabilities and the
disclosures relating to contingent liabilities as of the date of the
financial statements. Examples of such estimates include the useful
lives of tangible and intangible fixed assets, provision for doubtful
debts / advances, future obligations in respect of retirement benefit
plans, provision for inventory obsolescence, impairment of investments,
etc. Difference, if any, between the actual results and estimates is
recognised in the period in which the results are known.

All assets and liabilities have been classified as current and
non-current as per normal operating cycle of the Company and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on nature of products / services, the Company has ascertained its
operating cycle as 12 months for the purpose of current and non-current
classification of assets and liabilities.

b) Work-in-progress at lower of weighted average cost including
conversion cost or net realisable value.

c) Finished goods at lower of weighted average cost including
conversion cost and excise duty paid / payable on such goods or net
realisable value.

1.3 Depreciation Amortisation

a) Tangible assets:

i) Depreciation on revalued fixed assets is provided on the re-valued
amount derived based on valuation carried out by independent valuers.
The depreciation on re-valued portion of the fixed assets is
transferred from revaluation reserve to the Statement of profit and
loss.

ii) Depreciation on fixed assets is provided on straight line method at
the rates and in the manner prescribed under schedule XIV to the
Companies Act, 1956.

iii) In the case of fixed assets where the technological progress and
upgradation is faster, the Company has provided accelerated
depreciation at rates higher than the rates specified in schedule XIV
to the Companies Act, 1956. Accordingly, the useful life of such
assets has been recomputed and depreciation has been provided at the
following rates with effect from 1st July, 2003:

iv) Extra shift depreciation is provided on location basis.

v) Leasehold land is amortised over the primary period of the lease.

vi) Leasehold Building is depreciated at rates prescribed for buildings
under schedule XIV of the Companies Act, 1956 or rates derived based on
lease term for the leasehold building, whichever is higher. Leasehold
building improvements are written off over the period of lease or their
estimated useful life, whichever is earlier, on a straight line basis.

b) Intangible assets:

i) a) Technical know-how acquired prior to the year 2001 is amortised
as per the rates applicable to plant and equipment prescribed under
schedule XIV to the Companies Act, 1956. b) Technical know-how
acquired during and after the year 2001 is amortised over a period of
five years.

ii) Computer software is amortised over a period of four years.

1.4 Research and Development

Revenue expenditure on research and development is charged under
respective heads of expenditure in the Statement of profit and loss.
Capital expenditure on research and development is included as part of
fixed assets and depreciated on the same basis as other fixed assets.

1.5 Revenue Recognition

a) i) Revenue from sale of products is recognised when all the
significant risks and rewards of ownership of the products are passed
on to the customers, which is generally on despatch of goods.

ii) Revenue in respect of services is recognised when services are
performed in accordance with the terms of contract with customers.

c) Revenue from royalty is accrued and recognised, when the specified
goods of the supplier are sold by the Company''s dealers in accordance
with the terms of agreement.

1.6 Fixed assets (including capital work in progress)

a) Tangible assets:

Tangible fixed assets are stated at original cost net of Cenvat availed
less accumulated depreciation except in case of certain freehold land
and buildings which are stated at re-valued amounts as at 31st May
1987, based on valuation carried out by independent valuers, less
accumulated depreciation. Own manufactured assets are capitalised at
factory cost. Cost includes inward freight, taxes and expenses
incidental to acquisition and installation, up to the point the asset
is ready for its intended use. Certain project related direct expenses,
incurred at site for the period upto the date of commencement of
commercial production are capitalised. (Also refer to accounting policy
on borrowing costs infra).

b) Intangible assets:

Intangible assets are stated at cost of acquisition less amortisation.

c) Capital work in progress:

Capital work in progress includes cost of equipments and other expenses
incidental to its acquisition which are not yet ready for use.

1.7 Foreign currency transactions

a) The reporting currency of the Company is Indian Rupee.

b) Foreign currency transactions are recorded on initial recognition in
the reporting currency using the exchange rates prevailing at the date
of the transaction.

c) Monetary assets and Monetary liabilities denominated in foreign
currencies (other than those relating to foreign branch) are converted
at rate of exchange prevailing on the date of the balance sheet.

d) Exchange differences on settlement/conversion are included in the
Statement of profit and loss in the period in which they arise.

e) Foreign exchange differences arising on marking forward contracts to
market rates are recognised in the Statement of profit and loss in the
period in which they arise and the premium paid/received is accounted
as expense/income over the period of the contract.

f) Translations relating to foreign branch are recorded as under:

i) Monetary assets and Monetary liabilities are converted at period-end
rates as applicable.

ii) Revenue items are translated at the average rate for the period.

iii) All differences arising on translation of foreign currency
balances are included in the Statement of profit and loss.

1.8 Investments

Long term investments are carried at cost after providing for any
diminution in value, if such diminution is of a permanent nature.

Current Investments are carried at lower of cost or market value.

1.9 Employee benefits

a) Short Term Employee Benefits:

All employee benefits falling due wholly within twelve months of
rendering the service are classified as short term employee benefits.
The benefits like salaries, wages, short term compensated absences,
expected cost of bonus, ex- gratia etc. are recognised on undiscounted
basis in the period in which the employee renders the related service.

b) Post-employment benefits:

i) Defined contribution plans: The Company''s contribution to the
state-administered provident fund and employees'' pension scheme and the
employees'' superannuation scheme are defined contribution plans. The
contribution paid/payable under the schemes based on a fixed percentage
of the eligible employees'' salary is recognised during the period in
which the employee renders the related service. The Company has no
further obligation beyond these contributions.

ii) Defined benefit plans: The employees'' gratuity fund schemes managed
by Trusts are the Company''s defined benefit plans. The present value of
the obligation is determined based on actuarial valuation using the
projected unit credit method which recognises each period of service as
giving rise to additional unit of employee benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gains and losses are recognised immediately in the Statement
of profit and loss. In case of funded plans, the fair value of the plan
assets is reduced from the gross obligation, to recognise the
obligation on a net basis.

iii) Long-term employee benefits: The obligation for long term
compensated absences is recognised in the same manner as in the case of
defined benefit plans as mentioned in (b) (ii) above.

1.10 Borrowing costs

Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of such assets till such time the asset is ready for its intended use
or sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.

1.11 Segment accounting and reporting

a) Segment accounting and reporting which is done in accordance with
the accounting policies of the Company and the guidelines prescribed by
Accounting Standard 17, Segment Reporting, as specified in the
Companies (Accounting Standards) Rules, 2006 is as follows:

i) Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment including inter-segment
revenue.

ii) Expenses that are directly identifiable with/ allocable to segments
are considered for determining the segment result. The expenses, which
relate to the Company as a whole and not allocable to segments, are
included under "unallocable expenditure".

iii) Income which relates to the Company as a whole and not allocable
to segments is included in "unallocable income".

iv) Segment assets and liabilities include those directly identifiable
with respective segments. Unallocable assets and liabilities represent
the assets and liabilities that relate to the Company as a whole and
not allocable to any segment.

b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business
segments is accounted on the basis of transfer price agreed between the
segments.

1.12 Leases

Assets acquired on lease where a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Statement of profit
and loss on a straight line basis.

1.13 Taxes on income

Tax on income for the current period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessments / appeals. The provision for tax is adjusted for
Minimum Alternate Tax (MAT) paid in earlier years.

Deferred tax is recognised on timing differences between the accounting
income and the taxable income for the period and quantified using the
tax rates and laws enacted or substantively enacted on the balance
sheet date. Deferred tax assets which arise on account of unabsorbed
business losses and unabsorbed depreciation are recognised and carried
forward only to the extent that management is virtually certain that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. Other deferred tax assets are
recognised only to the extent there is a reasonable certainty of
realisation in future. Such assets are reviewed at each balance sheet
date to reassess realisation.

1.14 Impairment of assets

The carrying amount of assets, other than inventories is reviewed at
each balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount of
the assets is estimated.

An impairment loss is recognised whenever the carrying amount of an
asset or a cash generating unit exceeds its recoverable amount. The
recoverable amount is the higher of the asset''s net selling price and
value in use determined based on the present value of estimated future
cash flows. All impairment losses are recognised in the statement of
profit and loss.

After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.

1.15 Provisions, contingent liabilities and contingent assets

a) Provisions are recognised for liabilities that can be measured only
by using a substantial degree of estimation, if

i) the Company has a present obligation as a result of a past event,

ii) a probable outflow of resources is expected to settle the
obligation and

iii) the amount of the obligation can be reliably estimated.

b) Reimbursement expected in respect of expenditure required to settle
a liability is recognised only when it is virtually certain that the
reimbursement will be received.

c) Contingent liability is disclosed in the case of

i) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
obligation

ii) a present obligation when no reliable estimate is possible, and

iii) a possible obligation, arising from past events where the
probability of outflow of resources is remote.

d) Contingent assets are neither recognised nor disclosed.

e) Provisions, contingent liabilities and contingent assets are
reviewed at each balance sheet date and updated / recognised as
appropriate.

Mar 31, 2012

1.1 Basis of accounting and preparation of financial statements

The Company maintains its accounts on accrual basis following the
historical cost convention, in accordance with generally accepted
accounting principles [GAAP] except for the revaluation of certain
fixed assets, in compliance with the provisions of the Companies Act,
1956 including the Accounting Standards specified in the Companies
(Accounting Standards) Rules, 2006. However, certain escalation and
other claims, which are not ascertainable /acknowledged by customers,
are accounted on receipt basis.

The preparation of financial statements in conformity with GAAP
requires that the management of the Company make estimates and
assumptions that affect the reported amounts of income and expenses of
the period, the reported balances of assets and liabilities and the
disclosures relating to contingent liabilities as of the date of the
financial statements. Examples of such estimates include the useful
lives of tangible and intangible fixed assets, provision for doubtful
debts / advances, future obligations in respect of retirement benefit
plans, provision for inventory obsolescence, impairment of investments,
etc. Difference, if any, between the actual results and estimates is
recognised in the period in which the results are known.

All assets and liabilities have been classified as current and
non-current as per normal operating cycle of the Company and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on nature of products / services, the Company has ascertained its
operating cycle as 12 months for the purpose of current and non-current
classification of assets and liabilities.

b) Work-in-progress at lower of weighted average cost including
conversion cost or net realisable value.

c) Finished goods at lower of weighted average cost including
conversion cost and excise duty paid / payable on such goods or net
realisable value.

1.3 Depreciation and Amortisation

a) Tangible assets:

i) Depreciation on re-valued fixed assets is provided on the re-valued
amount derived based on valuation carried out by independent valuers.
The depreciation on re-valued portion of the fixed assets is
transferred from revaluation reserve to the statement of profit and
loss.

ii) Depreciation on fixed assets is provided on straight line method at
the rates and in the manner prescribed under schedule XIV to the
Companies Act, 1956.

iii) In the case of fixed assets where the technological progress and
upgradation is faster, the Company has provided accelerated
depreciation at rates higher than the rates specified in schedule XIV
to the Companies Act, 1956. Accordingly, the useful life of such
assets has been recomputed and depreciation has been provided at the
following rates with effect from 1st July 2003:

iv) Extra shift depreciation is provided on location basis.

v) Leasehold land is amortised over the primary period of the lease.

vi) Leasehold Building is depreciated at rates prescribed for buildings
under schedule XIV of the Companies Act, 1956 or rates derived based on
lease term for the leasehold building, whichever is higher. Leasehold
building improvements are written off over the period of lease or their
estimated useful life, whichever is earlier, on a straight line basis.
b) Intangible assets:

i) a) Technical know-how acquired prior to the year 2001 is amortised
as per the rates applicable to plant and machinery prescribed under
schedule XIV to the Companies Act, 1956. b) Technical know-how
acquired during and after the year 2001 is amortised over a period of
five years.

ii) Computer software is amortised over a period of four years.

1.4 Research and Development

Revenue expenditure on research and development is charged under
respective heads of expenditure in the statement of profit and loss.
Capital expenditure on research and development is included as part of
fixed assets and depreciated on the same basis as other fixed assets.

1.5 Revenue Recognition

a) i) Revenue from sale of products is recognised when all the
significant risks and rewards of ownership of the products are passed
on to the customers, which is generally on despatch of goods.

b) ii) Revenue in respect of services is recognised when services are
performed in accordance with the terms of contract with customers.

d) Revenue from royalty is accrued and recognised, when the specified
goods of the supplier are sold by the Company's dealers in accordance
with the terms of agreement.

1.6 Fixed assets (including capital work in progress)

a) Tangible assets:

Tangible fixed assets are stated at original cost net of Cenvat availed
less accumulated depreciation except in case of certain freehold land
and buildings which are stated at revalued amounts as at 31st May 1987,
based on valuation carried out by independent valuers, less accumulated
depreciation. Own manufactured assets are capitalised at factory cost.
Cost includes inward freight, taxes and expenses incidental to
acquisition and installation, up to the point the asset is ready for
its intended use. Certain project related direct expenses, incurred at
site for the period upto the date of commencement of commercial
production are capitalised. (Also refer to accounting policy on
borrowing costs infra).

b) Intangible assets:

Intangible assets are stated at cost of acquisition less amortisation.

c) Capital work in progress:

Capital work in progress includes cost of equipments and other expenses
incidental to its acquisition which are not yet ready for use.

1.7 Foreign currency transactions

a) The reporting currency of the Company is Indian Rupee.

b) Foreign currency transactions are recorded on initial recognition in
the reporting currency using the exchange rates prevailing at the date
of the transaction.

c) Monetary assets and Monetary liabilities denominated in foreign
currencies (other than those relating to foreign branch) are converted
at rate of exchange prevailing on the date of the balance sheet.

d) Exchange differences on settlement/conversion are included in the
statement of profit and loss in the period in which they arise.

e) Foreign exchange differences arising on marking forward contracts to
market rates are recognised in the statement of profit and loss in the
period in which they arise and the premium paid/received is accounted
as expense/income over the period of the contract.

f) Translations relating to foreign branch are recorded as under:

i) Monetary assets and Monetary liabilities are converted at period-end
rates as applicable.

ii) Revenue items are translated at the average rate for the period.

iii) All differences arising on translation of foreign currency
balances are included in the statement of profit and loss.

1.8 Investments

Long term investments are carried at cost after providing for any
diminution in value, if such diminution is of a permanent nature.

Current Investments are carried at lower of cost or market value.

1.9 Employee benefits

a) Short Term Employee Benefits:

All employee benefits falling due wholly within twelve months of
rendering the service are classified as short term employee benefits.
The benefits like salaries, wages, short term compensated absences,
expected cost of bonus, ex-gratia etc. are recognised on undiscounted
basis in the period in which the employee renders the related service.

b) Post-employment benefits:

i) Defined contribution plans: The Company's contribution to the
state-administered provident fund and employees' pension scheme and the
employees' superannuation scheme are defined contribution plans. The
contribution paid/ payable under the schemes based on a fixed
percentage of the eligible employees' salary is recognised during the
period in which the employee renders the related service. The Company
has no further obligation beyond these contributions.

ii) Defined benefit plans: The employees' gratuity fund schemes managed
by Trusts are the Company's defined benefit plans. The present value of
the obligation is determined based on actuarial valuation using the
projected unit credit method which recognises each period of service as
giving rise to additional unit of employee benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gains and losses are recognised immediately in the statement
of profit and loss. In case of funded plans, the fair value of the plan
assets is reduced from the gross obligation, to recognise the
obligation on a net basis.

iii) Long-term employee benefits: The obligation for long term
compensated absences is recognised in the same manner as in the case of
defined benefit plans as mentioned in (b) (ii) above.

1.10 Borrowing costs

Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of such assets till such time the asset is ready for its intended use
or sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.

1.11 Segment accounting and reporting

a) Segment accounting and reporting which is done in accordance with
the accounting policies of the Company and the guidelines prescribed by
Accounting Standard 17, Segment Reporting, as specified in the
Companies (Accounting Standards) Rules, 2006 is as follows:

i) Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment including inter-segment
revenue.

ii) Expenses that are directly identifiable with/ allocable to segments
are considered for determining the segment result. The expenses, which
relate to the Company as a whole and not allocable to segments, are
included under "unallocable expenditure".

iii) Income which relates to the Company as a whole and not allocable
to segments is included in "unallocable income"

iv) Segment assets and liabilities include those directly identifiable
with respective segments. Unallocable assets and liabilities represent
the assets and liabilities that relate to the Company as a whole and
not allocable to any segment.

b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business
segments is accounted on the basis of transfer price agreed between the
segments.

1.12 Leases

Assets acquired on lease where a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the statement of profit
and loss on a straight line basis.

1.13 Taxes on income

Tax on income for the current period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessments / appeals. The provision for tax is adjusted for
Minimum Alternate Tax (MAT) paid in earlier years.

Deferred tax is recognised on timing differences between the accounting
income and the taxable income for the period and quantified using the
tax rates and laws enacted or substantively enacted on the balance
sheet date. Deferred tax assets which arise on account of unabsorbed
business losses and unabsorbed depreciation are recognised and carried
forward only to the extent that management is virtually certain that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. Other deferred tax assets are
recognised only to the extent there is a reasonable certainty of
realisation in future. Such assets are reviewed at each balance sheet
date to reassess realisation.

1.14 Impairment of assets

The carrying amount of assets, other than inventories is reviewed at
each balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount of
the assets is estimated.

An impairment loss is recognised whenever the carrying amount of an
asset or a cash generating unit exceeds its recoverable amount. The
recoverable amount is the higher of the asset's net selling price and
value in use determined based on the present value of estimated future
cash flows. All impairment losses are recognised in the statement of
profit and loss.

After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.

1.15 Provisions, contingent liabilities and contingent assets

a) Provisions are recognised for liabilities that can be measured only
by using a substantial degree of estimation, if

i) the Company has a present obligation as a result of a past event,

ii) a probable outflow of resources is expected to settle the
obligation and

iii) the amount of the obligation can be reliably estimated.

b) Reimbursement expected in respect of expenditure required to settle
a liability is recognised only when it is virtually certain that the
reimbursement will be received.

c) Contingent liability is disclosed in the case of

i) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
obligation

ii) a present obligation when no reliable estimate is possible, and

iii) a possible obligation, arising from past events where the
probability of outflow of resources is remote.

d) Contingent assets are neither recognised nor disclosed.

e) Provisions, contingent liabilities and contingent assets are
reviewed at each balance sheet date and updated / recognised as
appropriate.

Mar 31, 2011

1 Basis of accounting and preparation of financial statements

The Company maintains its accounts on accrual basis following the
historical cost convention in accordance with generally accepted
accounting principles [GAAP] except for the revaluation of certain
fixed assets, in compliance with the provisions of the Companies Act,
1956 including the Accounting Standards specified in the Companies
(Accounting Standards) Rules, 2006 prescribed by the Central
Government. However, certain escalation and other claims, which are not
ascertainable / acknowledged by customers, are accounted on receipt
basis.

The preparation of financial statements in conformity with GAAP
requires that the management of the Company makes estimates and
assumptions that affect the reported amounts of income and expenses of
the period, the reported balances of assets and liabilities and the
disclosures relating to contingent liabilities as of the date of the
financial statements. Examples of such estimates include the useful
lives of tangible and intangible fixed assets, provision for doubtful
debts / advances, future obligations in respect of retirement benefit
plans, provision for inventory obsolescence, etc. Difference, if any,
between the actual results and estimates is recognised in the period in
which the results are known.

b) Work-in-progress at lower of weighted average cost including
conversion cost or net realisable value.

c) Finished goods at lower of weighted average cost including
conversion cost and excise duty paid / payable on such goods or net
realisable value.

3 Depreciation and Amortisation

a) Tangible assets:

i) Depreciation on revalued fixed assets is provided on the revalued
amount derived based on valuation carried out by independent valuers.
The depreciation on revalued portion of the fixed assets is transferred
from revaluation reserve to Profit and Loss Account.

ii) Depreciation on fixed assets is provided on straight line method at
the rates and in the manner prescribed under Schedule XIV to the
Companies Act, 1956.

iii) In the case of fixed assets where the technological progress and
upgradation is faster, the Company has provided accelerated
depreciation at rates higher than the rates specified in Schedule XIV
to the Companies Act, 1956. Accordingly, the useful life of such
assets has been recomputed and depreciation has been provided at the
following rates with effect from 1st July, 2003:

iv) Extra shift depreciation is provided on location basis.

v) Leasehold land is amortised over the primary period of the lease.

vi) Leasehold Building is depreciated at rates prescribed for buildings
under Schedule XIV of the Companies Act, 1956 or rates derived based on
lease term for the leasehold building, whichever is higher. Leasehold
building improvements are written off over the period of lease or their
estimated useful life, whichever is earlier, on a straight line basis.

b) Intangible assets:

i) a) Technical Know-how acquired prior to the year 2001 is amortised
as per the rates applicable to plant and machinery prescribed under
schedule XIV to the Companies Act, 1956.

b) Technical Know-how acquired during and after the year 2001 is
amortised over a period of five years.

ii) Computer software is amortised over a period of four years.

4 Research and Development

Revenue expenditure on research and development is charged under
respective heads of expenditure in the Profit and Loss Account. Capital
expenditure on research and development is included as part of fixed
assets and depreciated on the same basis as other fixed assets.

5 Revenue Recognition

a) i) Revenue from sale of products is recognised when all the
significant risks and rewards of ownership of the products are passed
on to the customers, which is generally on despatch of goods.

ii) Revenue in respect of services is recognised when services are
performed in accordance with the terms of contract with customers.

Tangible fixed assets are stated at original cost net of Cenvat availed
less accumulated depreciation except in case of certain freehold land
and buildings which are stated at revalued amounts as at 31st May,
1987, based on valuation carried out by independent valuers, less
accumulated depreciation. Own manufactured assets are capitalised at
factory cost. Cost includes inward freight, taxes and expenses
incidental to acquisition and installation, up to the point the asset
is ready for its intended use. Certain project related direct expenses,
incurred at site for the period upto the date of commencement of
commercial production are capitalised. (Also refer to accounting policy
on borrowing costs infra).

b) Intangible assets:

Intangible assets are stated at cost of acquisition less amortisation.

c) Capital Work-in-Progress:

Capital Advances in respect of Capital Work-in-Progress or towards
procurement of fixed assets and assets acquired but not ready for use
are classified as Capital Work-in-Progress.

7 Foreign currency transactions

a) The reporting currency of the Company is Indian Rupee.

b) Foreign currency transactions are recorded on initial recognition in
the reporting currency using the exchange rates prevailing at the date
of the transaction.

c) Monetary assets and Monetary liabilities denominated in foreign
currencies (other than those relating to foreign branch) are converted
at rate of exchange prevailing on the date of the Balance Sheet.

d) Exchange differences on settlement/conversion are included in the
Profit and Loss Account in the period in which they arise.

e) Foreign exchange differences arising on marking forward contracts to
market rates are recognised in the Profit and Loss Account in the
period in which they arise and the premium paid/received is accounted
as expense/income over the period of the contract.

f) Translations relating to foreign branch are recorded as under:

i) Monetary assets and Monetary liabilities are converted at period-end
rates as applicable.

ii) Revenue items are translated at the average rate for the period.

iii) All differences arising on translation of foreign currency
balances are included in the Profit and Loss Account.

8 Investments

Long term investments are carried at cost after providing for any
diminution in value, if such diminution is of a permanent nature.

Current Investments are carried at lower of cost or market value.

9 Employee benefits

a) Short Term Employee Benefits:

All employee benefits falling due wholly within twelve months of
rendering the service are classified as short term employee benefits.
The benefits like salaries, wages, short term compensated absences,
expected cost of bonus, ex- gratia etc. are recognised on undiscounted
basis in the period in which the employee renders the related service.

b) Post-employment benefits:

i) Defined contribution plans: The Companys contribution to the
state-administered provident fund and employees pension scheme and the
employees superannuation scheme are defined contribution plans. The
contribution paid/payable under the schemes based on a fixed percentage
of the eligible employees salary is recognised during the period in
which the employee renders the related service. The Company has no
further obligation beyond these contributions.

ii) Defined benefit plans: The employees gratuity fund schemes managed
by Trusts are the Companys defined benefit plans. The present value of
the obligation is determined based on actuarial valuation using the
projected unit credit method which recognises each period of service as
giving rise to additional unit of employee benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gains and losses are recognised immediately in the Profit and
Loss Account. In case of funded plans, the fair value of the plan
assets is reduced from the gross obligation, to recognise the
obligation on a net basis.

iii) Long-term employee benefits: The obligation for long term
compensated absences is recognised in the same manner as in the case of
defined benefit plans as mentioned in (b) (ii) above.

10 Borrowing costs

Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of such assets till such time the asset is ready for its intended use
or sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.

11 Segment accounting and reporting

a) Segment accounting and reporting which is done in accordance with
the accounting policies of the Company and the guidelines prescribed by
Accounting Standard 17, Segment Reporting, as specified in the
Companies (Accounting Standards) Rules, 2006 is reported as follows:

i) Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment including inter-segment
revenue.

ii) Expenses that are directly identifiable with / allocable to
segments are considered for determining the segment result. The
expenses, which relate to the Company as a whole and not allocable to
segments, are included under "unallocable expenditure".

iii) Income which relates to the Company as a whole and not allocable
to segments is included in "unallocable income".

iv) Segment assets and liabilities include those directly identifiable
with respective segments. Unallocable assets and liabilities represent
the assets and liabilities that relate to the Company as a whole and
not allocable to any segment.

b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business
segments is accounted on the basis of transfer price agreed between the
segments.

12 Leases

Assets acquired on lease where a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Profit and Loss
Account on a straight line basis.

13 Taxes on income

Tax on income for the current period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessments / appeals. The provision for tax is adjusted for
Minimum Alternate Tax (MAT) paid in earlier years.

Deferred tax is recognised on timing differences between the accounting
income and the taxable income for the period and quantified using the
tax rates and laws enacted or substantively enacted on the balance
sheet date. Deferred tax assets which arise on account of unabsorbed
business losses and unabsorbed depreciation are recognised and carried
forward only to the extent that management is virtually certain that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. Other deferred tax assets are
recognised only to the extent there is a reasonable certainty of
realisation in future. Such assets are reviewed at each balance sheet
date to reassess realisation.

14 Impairment of assets

The carrying amount of assets, other than inventories is reviewed at
each Balance Sheet date to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount of
the assets is estimated.

An impairment loss is recognised whenever the carrying amount of an
asset or a cash generating unit exceeds its recoverable amount. The
recoverable amount is the higher of the assets net selling price and
value in use determined based on the present value of estimated future
cash flows. All impairment losses are recognised in the profit and loss
account.

After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.

15 Provisions, contingent liabilities and contingent assets

a) Provisions are recognised for liabilities that can be measured only
by using a substantial degree of estimation, if

i) the Company has a present obligation as a result of a past event,

ii) a probable outflow of resources is expected to settle the
obligation and

iii) the amount of the obligation can be reliably estimated.

b) Reimbursement expected in respect of expenditure required to settle
a liability is recognised only when it is virtually certain that the
reimbursement will be received.

c) Contingent liability is disclosed in the case of

i) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
obligation

ii) a present obligation when no reliable estimate is possible, and

iii) a possible obligation, arising from past events where the
probability of outflow of resources is remote.

d) Contingent assets are neither recognised nor disclosed.

e) Provisions, contingent liabilities and contingent assets are
reviewed at each Balance Sheet date and updated as appropriate.

Jun 30, 2010

1 Basis of accounting

The Company maintains its accounts on accrual basis following the
historical cost convention in accordance with generally accepted
accounting principles [GAAP] except for the revaluation of certain
fixed assets, in compliance with the provisions of the Companies Act,
1956 and the Accounting Standards as specified in the Companies
(Accounting Standards) Rules, 2006 prescribed by the central
government. However, certain escalation and other claims, which are not
ascertainable/acknowledged by customers, are not taken into account.

The preparation of financial statements in conformity with GAAP
requires that the management of the Company makes estimates and
assumptions that affect the reported amounts of income and expenses of
the period, the reported balances of assets and liabilities and the
disclosures relating to contingent liabilities as of the date of the
financial statements. Examples of such estimates include the useful
lives of tangible and intangible fixed assets, provision for doubtful
debts/advances, future obligations in respect of retirement benefit
plans etc. Difference, if any, between the actual results and estimates
is recognised in the period in which the results are known.

b) Work-in-progress at lower of weighted average cost including
appropriate overheads or net realisable value.

c) Finished goods at lower of weighted average cost including
appropriate overheads and excise duty paid/payable on such goods or net
realisable value.

3 Depreciation and Amortisation

a) Tangible assets:

i) Depreciation on revalued fixed assets is provided at the rates given
by the valuers. The difference between depreciation on buildings based
on revaluation and that on the original cost is transferred from
revaluation reserve to profit and loss account.

ii) Depreciation on assets is provided on straight line method at the
rates and in the manner prescribed under schedule XIV to the Companies
Act, 1956.

iii) The Company has provided accelerated depreciation which are higher
than the rates specified in schedule XIV to the Companies Act, 1956
where the technological progress and upgradation is faster and
accordingly the life of the assets has been recomputed in the case of
following assets and the depreciation has been accordingly provided
with effect from 1st July, 2003.

iv) Extra shift depreciation is provided on location basis.

b) Intangible assets:

i) Leasehold land is amortised over the primary period of the lease.

ii) Leasehold Building is depreciated as prescribed under Schedule XIV
of the Companies Act, 1956.

iii) a) Technical know-how acquired prior to 2001 is depreciated as per
the rates applicable to plant and machinery prescribed under schedule
XIV to the Companies Act, 1956.

b) Technical know-how acquired after 2001 is depreciated over a period
of five years.

iv) Computer software is amortised over a period of four years.

4 Research and Development

Revenue expenditure on research and development is charged under
respective heads of account. Capital expenditure on research and
development is included as part of fixed assets and depreciated on the
same basis as other fixed assets.

5 Revenue Recognition

a) i) Revenue from sale of product is recognised when all the
significant risk and reward of ownership of the products are passed on
to the customers, which is generally on despatch of goods.

ii) Revenue in respect of services is recognised in terms of the
contract with the customers.

b) Sales include excise duty and direct sales compensation but exclude
VAT and Service Tax.

6 Fixed assets

a) Tangible assets:

Fixed assets are stated at original cost net of Cenvat availed less
accumulated depreciation except in case of certain freehold land and
buildings which are stated at revalued amounts as at 31st May, 1987,
less depreciation at the rates given by the valuers. Own manufactured
assets are capitalised at factory cost. Certain project related direct
expenses, incurred at site for the period upto the date of commencement
of commercial production are capitalised. (Also refer to policy on
borrowing costs infra).

b) Intangible assets:

Intangible assets are stated at cost less amortisation.

7 Foreign currency transactions

a) The reporting currency of the company is Indian Rupee.

b) Foreign currency transactions are recorded on initial recognition in
the reporting currency using the exchange rates at the date of the
transaction.

c) Monetary assets and Monetary liabilities denominated in foreign
currencies (other than those relating to foreign branch) are converted
at year-end rates as applicable.

d) Exchange difference on settlement/conversion are adjusted to profit
and loss account.

e) Foreign exchange difference arising on forward contracts are
recognised in the period in which they arise and the premium
paid/received is accounted as expense/income over the period of the
contract.

f) Translations relating to foreign branch are as under:

i) Monetary assets and Monetary liabilities are converted at year-end
rates as applicable. ii) Revenue items at the average rate for the
year.

8 Investments

Long term investments are carried at cost after providing for any
diminution in value if such diminution is of a permanent nature.

Current Investments are carried at lower of cost or market value.

9 Employee benefits

a) Short Term Employee Benefits:

All employee benefits falling due wholly within twelve months of
rendering the service are classified as short term employee benefits.
The benefits like salaries, wages, short term compensated absences, the
expected cost of bonus, ex-gratia etc. are recognised in the period in
which the employee renders the related service.

b) Post-employment benefits:

i) Defined contribution plans: The Companys contribution to the
state-administered provident fund and employees pension scheme and the
employees superannuation scheme are defined contribution plans. The
contribution paid/ payable under the schemes is recognised during the
period in which the employee renders the related service.

ii) Defined benefit plans: The employees gratuity fund schemes managed
by Trusts are the Companys defined benefit plans. The present value of
the obligation is determined based on actuarial valuation using the
projected unit credit method which recognises each period of service
as giving rise to additional unit of employee benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gains and losses are recognised immediately in profit and
loss account.

In case of funded plans, the fair value of the plan assets is reduced
from the gross obligation, to recognise the obligation on a net basis.

iii) Long-term employee benefits: The obligation for compensated
absences is recognised in the same manner as in the case of defined
benefit plans as mentioned in (b) (ii) above.

10 Borrowing costs

Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of such assets till such time as the asset is ready for its intended
use or sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.

11 Segment accounting

a) Segment accounting is done in line with the accounting policies of
the Company and is reported as follows:

i) Segment revenue includes sales and other income directly
identifiable with/allocable to the segment including inter-segment
revenue.

ii) Expenses that are directly identifiable with/allocable to segments
are considered for determining the segment result. The expenses, which
relates to the Company as a whole and not allocable to segments, are
included under "unallocable expenditure".

iii) Income which relates to the Company as a whole and not allocable
to segments is included in "unallocable income".

iv) Segment assets and liabilities include those directly identifiable
with respective segments. Unallocable assets and liabilities represents
the assets and liabilities that relate to the Company as a whole and
not allocable to any segment.

b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business
segments is accounted on basis of transfer price agreed between the
segments.

12 Leases

Assets acquired on lease where a significant portion of the risk and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to profit and loss account
on accrual basis.

13 Taxes on income

Tax on income for the current year is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessments /appeals. The provision for tax is adjusted for
Minimum Alternate Tax (MAT) paid in earlier years.

Deferred tax is recognised on timing differences between the accounting
income and the taxable income for the year and quantified using the tax
rates and laws enacted or substantively enacted on the balance sheet
date.

Deferred tax assets which arise mainly on account of unabsorbed
business loss and unabsorbed depreciation are recognised and carried
forward only to the extent that management is virtually certain that
sufficient future taxable income will be available against which such
deferred tax asset can be realised.

14 Impairment of assets

The carrying amount of assets, other than inventories is reviewed at
each balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount of
the assets is estimated.

An impairment loss is recognised whenever the carrying amount of an
asset a cash generating unit exceeds its recoverable amount. The
recoverable amount is the greater of the assets net selling price and
value in use which is determined based on the present value of
estimated future cash flow. All impairment losses are recognised in the
accounts.

An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount.

15 Provisions, contingent liabilities and contingent assets

a) Provisions are recognised for liabilities that can be measured only
by using a substantial degree of estimation, if

i) the Company has a present obligation as a result of a past event,

ii) a probable outflow of resources is expected to settle the
obligation and

iii) the amount of the obligation can be reliably estimated.

b) Reimbursement expected in respect of expenditure required to settle
a provision is recognised only when it is virtually certain that the
reimbursement will be received.

c) Contingent liability is disclosed in the case of

i) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
obligation

ii) a present obligation when no reliable estimate is possible, and

iii) a possible obligation, arising from past events where the
probability of outflow of resources is remote.